Fantasy Fund Manager: 98pc of players have made money

The top portfolios in our Fantasy Fund Manager game are already up by more
than 20pc.

By Paul Farrow

12:57PM BST 01 May 2009

The Telegraph's Fantasy Fund Manager has got off to a flying start with 98pc of players delivering a positive return. The average return is 3.9pc spookily matching the return of the FTSE All-Share over the period.

In the short time that the game has been live we have seen some remarkable individual performances among those playing the game. Leader of the pack is Muad Dib, from Cambridge, who has already seen a whopping 24.9pc increase in the value of his portfolio since the launch on April 6 2009.

Key to the portfolio's performance was the inclusion of F&C Private Equity Trust, which returned 68pc. Other funds in his portfolio, which have remained unchanged since day one include Aegon Sterling Bond, SR Europe, JO Hambro North Atlantic Smaller Companies and Melchior Japan.

Muad Dib is being closely followed by wsop from Salford, who is up 23.5pc. Wsop has also invested in F&C Private Equity Trust and JO Hambro North Atlantic Smaller Companies. His other holdings include Aegon High Yield, Invista Foundation Property and 3i Investment Trusts.

Andrew Shepherd (team-name wsop) said: "Why those funds? Simply being greedy when others are fearful, applying a little poker psychology, the wise words of research analyst extraordinaire John Goodall and maybe, just maybe, a soupçon of luck."

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Jasper Berens at JPMorgan Asset Management said he had been delighted with the numbers of people who had chosen to play. "The response has been overwhelming and the performance impressive. The game is helping people understand the importance of how a diversified portfolio can help secure their long-term future," he added.

The selection of a private equity trust by some players has proved very shrewd. The sector has been on its knees amid the financial crisis – the F&C trust was trading a large discount to net asset value (about 80pc at one stage), but a handful of players have benefited from a reversal in fortunes.

When an investment trust's share price is lower than the value of the assets, the trust is said to be trading at a discount to net asset value; when it is higher, the trust is said to be trading at a premium. If you buy shares in a trust trading at a 20pc discount, you will be paying 80p for every £1 worth of the underlying assets.

Since F&C Private Equity Trust reported in early April a much stronger balance sheet and valuations than was expected, its share price has started to recover. The positive news has resulted in the discount narrowing, boosting the share price.

Hamish Mair, manager of F&C Private Equity Trust, said: "The rise in the share price was a consequence of the narrowing of the discount to net asset value, which had been more than 80pc in the run-up to the company's annual results announcement but stood at 67pc on April 28.''

Mr Mair said that the entire private equity sector has bounced from the unprecedented lows of late March. "At those levels, the market was implying that just about every listed private equity fund had problems and a good number of them were going to go bust," Mr Mair said. "That would involve hundreds of businesses across Europe going under. Even if we are facing a severe recession, I think the collapse of the entire capitalist system – which this scenario implies – is still fairly unlikely.''

F&C Private Equity Trust is a fund of funds – investing in funds that invest in private equity, rather than investing in specific private equity companies. Mr Mair is confident that the trust will continue to perform. "We have had a bit of a bounce off rock bottom, and people are beginning to look through the gloom, but we are still on a substantial discount.

"If it took us five years to get back to our previous share price high of 201p in June 2008 – a 170pc improvement on the current share price – that would be a 22.5pc annual return. If it took 10 years, that would still be a return of 11pc a year."

No fewer than 10 funds have delivered more than 20pc over the past month – Gartmore Fledgling returned 39pc, while Isis Property was the third-best performer, returning 31pc.

Gervais Williams, manager of Gartmore Fledgling (which invests in the smallest companies in the FTSE All-Share) said: "It is an astonishing portfolio of unloved companies, many are trading at 20pc to book value, with yields of 9pc."

For example, the fund holds JJB Sports. Its share price was about 3p but it is now trading at 23p after it was announced that its landlords and creditors had voted for a company voluntary agreement (CVA) that could secure the company's future. Likewise Pendragon, the car dealer, has seen its share price rise from 2p to 14p.

Although the majority of funds in the competition are open-ended investment companies and unit trusts, investment trusts have dominated the best performance tables since the game went live. And unlike traditional portfolios in real life, many players appear to be adopting a more cavalier attitude.

The average equity weighting is 66pc, with the specialist sector full to the brim of niche funds the favourite, and overseas funds more popular than UK funds. The average bond weighting is 27pc, while on average players have 6pc in cash.

Fantasy Funds leader table

Increase in portfolio (based on last month's performance)

Muad Dib (Cambridge) 24.89pc

wsop (Salford) 23.51pc

The Oracle of Oxford (London) 21.56pc

webnet (Sevenoaks) 20.92pc

Shoney (Leeds) 20.54pc

I Am No Bernard Madoff (Hughenden) 19.76pc

bigbadyas (Luton) 18.67pc

relluS (Sherborne) 18.62pc

Tioman (High Salvington) 18.33pc

Simply in the red (Greylees) 18.06pc

Source: MoneyAM

Paul Farrow won the Investment Writer of the Year at this year's Headlinemoney Awards ceremony